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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Es = (%dQs) / (%dPrice)
Oligopoly
Substitution Effect
Non-collusive oligopoly
Price Elasticity of Supply
2. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage
Market Economy (Capitalism)
Price Ceiling
Shortage
Negative externality
3. Ei > 1
Perfectly inelastic
Economic Profit
Luxury
Marginal Cost (MC)
4. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption
Total Revenue Test
Total Product of Labor (TPL)
Private goods
Incidence of Tax
5. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus
Law of Supply
Price floor
Price elastic demand
Constant cost industry
6. Ed = 0 - no response to price change
Price Ceiling
Allocative Efficiency
Perfectly inelastic
Economics
7. The imbalance between limited productive resources and unlimited human wants
Profit Maximizing Resource Employment
Subsidy
Scarcity
Short run
8. A firm that has market power in the factor market (a wage-setter)
Substitute Goods
Cross-Price Elasticity of Demand
Monopsonist
Market Economy (Capitalism)
9. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Complementary Goods
Public goods
Perfectly competitive long-run equilibrium
Marginal Cost (MC)
10. Ed > 1 - meaning consumers are price sensitive
Price elastic demand
Marginal Analysis
Substitution Effect
Constant cost industry
11. The ability to set the price above the perfectly competitive level
Market power
Marginal Revenue Product (MRP)
Market Economy (Capitalism)
Substitute Goods
12. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic
Consumer surplus
Incidence of Tax
Economic Profit
Economies of Scale
13. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry
Normal Profit
Variable inputs
Oligopoly
Non-collusive oligopoly
14. Ed = 1
Marginal Productivity Theory
Marginal tax rate
Unit elastic demand
Long Run
15. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Shutdown Point
Determinants of Supply
Excess Capacity
Implicit costs
16. Total product divided by labor employed. APL = TPL/L
Average Product of Labor (APL)
Excess Capacity
Economics
Complementary Goods
17. The additional cost incurred from the consumption of the next unit of a good or a service
Price elastic demand
Necessity
Marginal Cost (MC)
Fixed inputs
18. Ei = (%dQd good X)/(%d Income)
Implicit costs
Income Elasticity
Fixed inputs
Decreasing Cost industry
19. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Income Effect
Public goods
Decreasing Cost industry
Law of Supply
20. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Profit Maximizing Resource Employment
Dead Weight Loss
Free-Rider Problem
Average Fixed Cost (AFC)
21. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good
Marginal Resource Cost (MRC)
Spillover benefits
Luxury
Free-Rider Problem
22. A good for which higher income decreases demand
Monopoly long-run equilibrium
Inferior Goods
Marginal Analysis
Producer surplus
23. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Marginal Resource Cost (MRC)
Economies of Scale
Consumer surplus
Collusive oligopoly
24. The total quantity - or total output of a good produced at each quantity of labor employed
Total Product of Labor (TPL)
Total Revenue
Monopolistic competition long-run equilibrium
Market Equilibrium
25. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Substitute Goods
Shortage
Marginal Analysis
Opportunity Cost
26. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Average Product of Labor (APL)
Perfect competition
Marginal Revenue Product (MRP)
Normal Profit
27. A good for which higher income increases demand
Producer surplus
Normal Goods
Monopoly long-run equilibrium
Price Elasticity of Supply
28. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price
Oligopoly
Resources
Average Total Cost (ATC)
Producer surplus
29. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit
Four-firm concentration ratio
Monopoly long-run equilibrium
Absolute Advantage
Fixed inputs
30. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Substitution Effect
Marginal tax rate
Monopolistic competition long-run equilibrium
Subsidy
31. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials
Surplus
Variable inputs
Resources
Constant Returns to Scale
32. Exists if a producer can produce more of a good than all other producers
Absolute Advantage
Shortage
Marginal Productivity Theory
Law of Diminishing Marginal Utility
33. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Negative externality
Free-Rider Problem
Determinants of Demand
Marginal Benefit (MB)
34. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Subsidy
Income Effect
Determinants of Supply
Negative externality
35. The additional benefit received from the consumption of the next unit of a good or service
Marginal Benefit (MB)
Perfect competition
Free-Rider Problem
Comparative Advantage
36. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Monopoly
Economic Profit
Short run
Cross-Price Elasticity of Demand
37. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Public goods
Increasing Cost Industry
Marginal Product of Labor (MPL)
Law of Diminishing Marginal Utility
38. The difference between total revenue and total explicit costs
Marginal Resource Cost (MRC)
Excise Tax
Accounting Profit
Spillover benefits
39. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Marginal Analysis
Substitute Goods
Marginal Productivity Theory
Specialization
40. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Substitution Effect
Marginal Revenue Product (MRP)
Price elasticity
Necessity
41. ATC = TC/Q = AFC + AVC
Variable inputs
Cross-Price Elasticity of Demand
Average Total Cost (ATC)
Private goods
42. The difference between total revenue and total explicit and implicit costs
Collusive oligopoly
Spillover costs
Price elastic demand
Economic Profit
43. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Profit Maximizing Resource Employment
Market Economy (Capitalism)
Price discrimination
Monopoly
44. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Production function
Marginal Benefit (MB)
Resources
Total Revenue Test
45. The price of a good measured in units of currency
Perfect competition
Marginal Product of Labor (MPL)
Absolute prices
Luxury
46. Entry of new firms shifts the cost curves for all firms upward
Total variable costs (TVC)
Spillover benefits
Increasing Cost Industry
Public goods
47. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Price floor
Non-collusive oligopoly
Total Revenue
Economic Growth
48. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Law of Diminishing Marginal Utility
Spillover costs
Unit elastic demand
Normal Profit
49. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Profit Maximizing Resource Employment
Total Fixed Costs (TFC)
Absolute Advantage
Total Revenue Test
50. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Collusive oligopoly
Monopoly
Comparative Advantage
Law of Increasing Costs